Where's the middle class plan?

Thursday

May 1, 2014 at 2:00 AM

The headline jumped off the page at me, starkly declaring "U.S. Middle Class No Longer the World's Richest." Of all the talk over the past several years about growing income inequality in the country and the suggestion that only the very wealthy have benefited in the economic recovery that's followed the Great Recession, this statement resonated the most with me. If ever there has been a canary in the coal mine concerning America's future, this truly is it.

The headline jumped off the page at me, starkly declaring "U.S. Middle Class No Longer the World's Richest." Of all the talk over the past several years about growing income inequality in the country and the suggestion that only the very wealthy have benefited in the economic recovery that's followed the Great Recession, this statement resonated the most with me. If ever there has been a canary in the coal mine concerning America's future, this truly is it.

For decades, the broad middle class has been a defining feature of the American economy and society. There have been suggestions in recent years that middle income people had gradually lost ground over the past 30 years or so, and a recent study has confirmed that some slippage has indeed occurred.

Data from the Luxembourg Income Study Database revealed that Canada has surpassed the U.S. in median per capita income for the middle class, according to the article in the April 23 New York Times. This is the first time this has occurred, and it appears that other countries are catching up to us and could surpass us in the near future as well. The reasons for this are several, and will likely not be entirely surprising. The Times article points to an education system that no longer produces a sufficient number of people capable of successfully competing for high quality jobs in an increasingly globalized economy, an income distribution system skewed disproportionately in favor of top executives, and other countries, notably Canada and in western Europe, that do more to support their middle and lower classes through things like subsidized child care and comprehensive health care benefits.

We have been discussing the challenges of education for decades. I can remember when I was in college 40 years ago, reading critiques of public education and ways to reform education to make it more student centered and effective. That debate still flourishes and, if anything, has gotten even more heated. Look at the furor over the common core curriculum standards that's currently waging, as an example.

And haven't we heard numerous comments from businesses and manufacturers that they are having trouble finding technically proficient employees even in an economy with millions of long term unemployed people unable to find work? To wit, there appears to be difficulty filling job openings in an economy with unusually high unemployment. That's a problem, and it exacerbates the need to educate a workforce able to compete in a rapidly evolving technological world.

For those middle class people who are working, incomes have stagnated. Over the last 40 years or so, we've gone from single earner households to two earner households to families using their homes as a bank account, just to keep up. That all stopped, of course, when the housing bubble burst in 2007.

Meantime, top executives often take home bonuses in the millions of dollars. The stock market has thrived since the recovery began a few years ago, and the indexes are at or near record highs. But companies have been reluctant to hire, citing a lack of confidence in the consumer's willingness to spend money and buy their products. Without demand, they are less willing to produce anything, so the need to add jobs just isn't there. And with job security in question, people don't spend. It's a vicious cycle.

Then there is the whole question of what government can do to support income and opportunity equality. I've always thought that universal health insurance availability was a good thing, and I still do. As the richest country in the world — and the U.S. still is that despite all this — the fact that there are people in this country that don't have adequate health insurance is scandalous. Obamacare, with its political history (not a single Republican vote in favor of it) and numerous waivers, delays, and administrative failures, probably isn't the best way to achieve the goal here, but at least it's a start. We need to improve it over time, not simply repeal it. Health insurance coverage relieves a lot of pressure, financial and otherwise, on families.

Similarly, think about the cost of child care, and the pressure that puts on families. I'm sure I'm not alone in saying that I know of young families that have decided that one parent will leave the workforce and remain in the home because it makes more financial sense to do that than have both keep working and pay for daily child care.

As a society, there needs to be a serious discussion of our priorities in these areas. Simply raising the minimum wage is not the answer.

When the economy nearly collapsed in 2007 and 2008, I was talking one day with some people about what the plans were to help the people who'd gotten home mortgages they couldn't afford, the banks that needed bailing out and so forth. One of the people didn't want to hear it. "When is somebody going to do something to support the middle class?" he asked.

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